I would like to take advantage of the forum launch for dropping my ideas about the favorite utilities that I would like to see for the MILK token
What I think should be implemented is a mechanism for sharing a part of the fees earned by the DEX with MILK users, like dividends for the stock market. I will detail why this is a great idea below.
Currently, MuesliSwap is the cheapest DEX of the Cardano ecosystem so a little increase in the fees would not negatively impact its attractiveness. Let us say 0.05 ADA per transaction, plus 0.1% of the transaction volume for all the transactions from the orderbook, the instant swap, the Milkomeda AMM, the limit swap, and so on…
According to CoinMarketCap data, MuesliSwap daily volume is of the order of $ 20,000 (by comparison, SundaeSwap is currently sitting at about $ 70,000 - 100,000). Assuming that SundaeSwap accounts for 50%+ of all Cardano transactions, the daily volume of all Cardano DEX transactions should be of the order of $ 150,000 - 200.000. Now. In a bear market. Before mass adoption.
Fast forward of 12 - 24 months. I believe it’s not blasphemy to think that the daily volume could increase by a factor of 10 - 20×, at least. In my opinion, the increase will probably be larger. This would bring the daily transacted volume of the whole Cardano ecosystem to a few million ADA per day (by comparison, the daily volume of the 50th biggest DEX is of the order of $ 2.5 M). Given how easy and convenient the instant swap functionality is, it is reasonable to think that MuesliSwap could transact a daily volume of 1+ M ADA (I am counting both the transactions within the DEX and those handled by the Instant Swap function).
1 M ADA / day × 365 days × 0.1% fee ÷ 10 M MILK = 0.0365 ADA / MILK of fees
Now let us add the transaction fees of 0.05 ADA. With an average transaction value of 100 ADA, that would be 10,000 tx / day.
10,000 tx / day × 365 days × 0.05 ADA / tx ÷ 10 M MILK = 0.01825 ADA / MILK of fees
Summing together the two numbers, we obtain a yearly interest of 0.05475 ADA / MILK, which perfectly matches the amount of ADA that you would get by staking 1 ADA for the same amount of time. I swear this was not intended, it simply came out
Now, if I wanted to be the moon boy of the situation, I could play with numbers and tell you: “Yeeeah! Look how much money you’d make if MuesliSwap had Uniswap volume!”. I will not do it because we really don’t know when (or even if) such numbers will be reached, so let’s keep our feet stuck to the ground and consider a more modest scenario
~0.055 ADA / MILK / year would make MILK less attractive than ADA because it’s a ROI of ~2% at the current price of ~2.25 ADA / MILK, and even less for higher prices, of the order of 5, 8, or 10 ADA. But there are more aspects that should be considered.
First, it would be hella cool to earn ADA while keeping MILK staked in a pool. This would result in MILK owners to simultaneously earn various tokens and ADA for their staking.
Second, not all the MILK tokens would be staked. Tokens blocked by developers for future distributions and tokens in liquidity pools / orderbooks / CEXes would not be, and this would shrink the denominator of the previous equations, thus increasing the ROI.
With 5 M MILK tokens staked, the interest would be ~0.11 ADA / MILK / year, which, with a price of 2.25 ADA / MILK, would lead to a ROI of the order of 5% on the capital (less if the price increases, more if the transaction volume increases, or the fees), plus the extra tokens of course. This would make sure that holding MILK would be just as profitable as holding ADA, but with many advantages that ADA alone does not offer.
And now something even cooler: if you don’t claim your rewards, your ADA could be staked as well, thus leading to a very nice interest compounding.
Now let us dig into more advantages.
The previous calculations were obtained by merely assuming that every MILK token should receive the same share of the rewards. Actually, this should not be the case. In order to encourage engagement, rather than speculation, the rewards should increase with the duration of the staking period (just like in ISPOs you get bonus tokens if you hold for specific numbers of epochs), and extra rewards could be granted to people using their MILK for voting new proposals (Catalyst anyone?). This would ensure that real supporters got more benefits than traders.
Moreover, since we would all love to see our MILK tokens gain value, it could also be nice to implement a form of “buyback program”. For example, if you had to claim 10 ADA of rewards, it would be nice if you could choose whether to get them in ADA or in MILK. In the latter case, the system could trigger the instant swap function and give you as many MILK as it could buy with 10 ADA (and the extra ADA that were not matched). This would increase the demand, hence the price.
I think this would make MILK the most interesting token of the Cardano ecosystem because it would allow you to get a yield possibly much higher than ADA staking, and without incurring in impermanent loss.
This is the first of many ideas that I have. I hope it will be found useful
Thank you if you read till here